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Our plans for the future

A crystal ball THERE IS LITTLE POINT in a charity being transparent if its work is transparently rubbish. In addition, a charity might appear to be transparent while actually hiding its failings. Working around this problem forms the key objective of our medium- to long-term strategy.
 

In brief

  • We want to measure charities' effectiveness. Ideally, we would be able to say definitively whether a charity deserves your cash. We can't do this at the moment. But we would like to.
  • We are working out the best way to do this. We will never have the resources to measure the direct impact of charities' work - especially if we are to keep on profiling 500 of them. In addition, we're not sure whether it is possible always to measure charities' impact across different areas of work.
  • We think we've found an answer. So instead of attempting to measure impact, we want to measure how charities respond to their key stakeholders: the people they're trying to help. We can measure how much charities listen to these people; and we can measure how seriously they take beneficiaries' views. And we think that charities which take their beneficiaries seriously are likely to be more effective than those which don't.

In detail

Instead of asking charities purely to be transparent, we want to ask them to demonstrate their effectiveness. There are many ways of doing this, but a key indicator is the amount that they listen, and then respond to what they hear.

We think that charities which listen and then respond to their beneficiaries and to their donors are likely to be significantly more effective than those which do not.

Our reasoning is straightforward. Charities exist to help their beneficiaries and cannot run without the goodwill of their donors. We hold it to be self-evident, therefore, that charities which respond properly to their beneficiaries and donors will better achieve their goals.
 
> For our most recent thinking in this area, visit our Accountability Log

We are trying to devise criteria to assess the quality of this response. This task is more difficult than we at first thought. So we ask our Accountability Working Group – populated by luminaries from the charity world – to help us with our thinking.

Definitions
To make sense of our argument, it’s important to explain in more depth what we mean by ‘listening and responding'. Our definition of these terms is precise. By them, we mean that charities should proactively seek key-stakeholder opinions, respond in a methodical way to them, and have processes in place whereby such opinions are able to influence strategic as well as tactical organizational decisions. Charities which behave in this way are truly accountable to their key stakeholders – beneficiaries and donors.

Listening, accountability and constituency voice
Our definition of ‘listening and responding’ is sometimes referred to as ‘accountability’ and sometimes as ‘constituency voice’. Such a complex nomenclature reflects the fact that this is a new field of enquiry – though it should not stand in the way of seeing the essential similarities between the terms.

Accountability and transparency
In many discussions, accountability – one of the terms used by others for the listening we describe – is referred to in the same breath as transparency. The ImpACT Coalition of UK charities regards them as two sides of the same coin. The Institute of Fundraising appears to view the concepts as synonymous. And the Charity Commission (in its guidance document RS8) likewise treats transparency and accountability as inextricably linked.

This link is drawn for good reason. In order for a charity to be accountable, it must first be transparent. Stakeholders have no chance of influencing a charity if they don’t know what it does or how it works. Similarly, if charities are to respond effectively to stakeholders’ concerns, they must provide transparent processes that enable stakeholders to speak out.

The responsive charity and the charity marketplace
Our work is predicated on the assumption that charities will be more effective if their supporters are able to choose effectively between them. In such a market, effective charities will triumph.

Yet the scarcity of information in the charity marketplace is a cause of failure. By encouraging charities to become more transparent, we hope to counteract this. But this is not enough. Potential donors must also be able to assess the quality of information provided by charities. We hope to give donors such an indicator of quality by assessing how much, and how well, charities listen to key stakeholder groups.

At present, charities are legally obliged to provide details of their finances in their annual report. This enables us to judge their financial stability. If charities extend their reporting to cover their effectiveness, the supply of information in the charity marketplace will be much enhanced. And donors will be able to make informed choices on which charity to support.

Assessing performance
Our enthusiasm for performance-assessment is, however, tempered with a realization that target-setting can be counterproductive. We are persuaded by the philosopher Onora O’Neill’s argument that excessive measurement can contribute to a loss of trust in the institutions measured – not something we want to achieve. So, while we aim to measure the efficacy with which charities respond to their key stakeholders, we want to construct a framework which does not provide perverse incentives.

Debts
Our thinking in this area owes much to previous work done in the field of NGO accountability and corporate social responsibility. In particular, we are influenced by the Global Accountability Project Framework of the One World Trust and by David Bonbright’s work on constituency voice at Keystone Accountability. A incisive summary of Keystone’s views, written by David Bonbright, appeared in the December issue of Alliance Magazine.

Our major debt, however, is to the members of our Accountability Working Group. They are: Richard Marsh (ImpACT Coalition), David Bonbright (Keystone), Monica Blagescu (HAP International), Kerry McCarthy (Matrix Knowledge Group), Diana Whitworth, Susan Langford (MagicMe), Tessa Herbert (NSPCC), Cathy Pharoah (Cass Business School), James Kliffen (MSF), Tris Lumley (New Philanthropy Capital), and Alex Jacobs (MANGO).

More
If you'd like to hear more about our work in this area, visit our Accountability Log, or get in touch.

 

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